Figuring which option is best for you to manage student loan repayments
NEW YORK - School isn’t over yet for recent college grads. Their next test is figuring out how to repay student loans.
It’s easy to become complacent about student loans because the bills don’t start arriving until after a six-month grace period following graduation. The catch is that interest continues to pile up, so borrowers should start making payments as soon as they’re able.
Here are five options that can make payments more manageable.
Extend payments - The easiest way to reduce monthly bills is to pick a repayment plan that stretches over a longer period. Instead of repaying federal loans over the standard 10 years, for example, borrowers might choose to stretch payments over 25 years.
The options will vary depending on how much you owe. For example, borrowers need to have a balance of more than $30,000 to qualify for the maximum 25-year plan. And the options with private loans differ depending on the lender. At Sallie Mae, for example, the repayment plans typically range from seven to 12 years.
Consolidate loans - Before the government overhauled its student loan program last year, borrowers could get federal loans from two sources. They could get Direct Loans from the government or Federal Family Education Loans from private lenders.
New graduates who have both types of loans can opt to consolidate their debt so they get just one monthly bill.
In addition to streamlining repayment, a consolidated loan can reduce the monthly payment. The repayment period can also be up to 30 years, depending on the size of your debt. But don’t forget that extending repayments means you’re paying more in interest.
Defer payments - In certain circumstances, graduates can also choose to defer payments. This is an option for borrowers who are continuing on to graduate school, enlisting in the military, unemployed, or earning below about $16,000 a year. Anyone on public assistance or who works in public service is also eligible.
If you don’t qualify for deferment, you can still apply to postpone payments on federal loans under what’s called “forbearance.’’ This may be an option if you’re dealing with medical issues or other circumstances that would impair your ability to make payments. Forbearance is decided on a case-by-case basis.
Income-based repayment - One option for reducing monthly payments doesn’t come with pricey consequences. With federal loans, strapped borrowers should check if they qualify for the Income-Based Repayment program. This program caps monthly payments at 15 percent of earnings above around $16,000; those who earn less may not have to make any monthly payments.
Eligibility for the program is determined by weighing your debt level against your income. To figure out whether you qualify, check the calculator at www.ibrinfo.org.
Candice Choi writes for the Associated Press. 
